newstodate.aero
Dec 07, 2012 (newstodate): Accession to EU membership was an attractive option for many states in Eastern Europe. But it did spell hardship for many of the airlines in the region in the waves of accession in 2004 and 2007.
-The increased competition and free market legislation forced many of these small-sized carriers into precarious financial situations. The looming bankruptcy concerns we are seeing for both Estonian Air and airBaltic come only after the collapse of Air Slovakia, Malev and more recently, Poland's OLT Express, says Skaiste Knyzaite, AviationCV.com CEO in a release.
-Prior to EU-accession, most of the state-owned flag carriers of Eastern Europe were either profitable or sustained losses within relatively narrow margins. While EU membership afforded greater network capacity for the airlines, it also led to heightened volatility of annual returns, resulting in record annual losses.
-Meanwhile, low cost competition from e.g. Ryanair, Wizz Air and EasyJet have procured substantial market share by expanding their activities into the newly opened markets of the East. Indeed, the past five years have shown nothing but ongoing annual losses for the majority of legacy carriers in the region, with a further decline projected unless drastic structural reforms are sought.
-However, most airlines in Eastern Europe remain under the ownership and regulation of national institutions. The failure to separate these two functions in the open aviation market of today does not lend well to balancing the books of many of these struggling carriers. Clearly, wide public support still remains in preserving the national interests of these legacy airlines, says Mr Knyzaite.
-The increased competition and free market legislation forced many of these small-sized carriers into precarious financial situations. The looming bankruptcy concerns we are seeing for both Estonian Air and airBaltic come only after the collapse of Air Slovakia, Malev and more recently, Poland's OLT Express, says Skaiste Knyzaite, AviationCV.com CEO in a release.
-Prior to EU-accession, most of the state-owned flag carriers of Eastern Europe were either profitable or sustained losses within relatively narrow margins. While EU membership afforded greater network capacity for the airlines, it also led to heightened volatility of annual returns, resulting in record annual losses.
-Meanwhile, low cost competition from e.g. Ryanair, Wizz Air and EasyJet have procured substantial market share by expanding their activities into the newly opened markets of the East. Indeed, the past five years have shown nothing but ongoing annual losses for the majority of legacy carriers in the region, with a further decline projected unless drastic structural reforms are sought.
-However, most airlines in Eastern Europe remain under the ownership and regulation of national institutions. The failure to separate these two functions in the open aviation market of today does not lend well to balancing the books of many of these struggling carriers. Clearly, wide public support still remains in preserving the national interests of these legacy airlines, says Mr Knyzaite.